Consequences of Florida Amendment One: Jacksonville Leaders Admit Need to Raise Property Tax Rates

In the September 10, 2009 Florida Times-Union article "Jacksonville council majority ready to raise taxes," Tia Mitchell reports that Jacksonville city leaders finally admitted the need to increase property tax rates as a result of the 2008 passage of Amendment One to the constitution of the State of Florida. The amendment allowed most property owners to exclude some of their property from taxation, with large benefits going to wealthy homeowners who move. Proponents of the amendment failed to explain sufficiently that other taxes would need to be imposed or property tax rates would need to be increased to compensate for the decreased revenues. The overall effect of Florida Amendment One has been to shift the tax burden from the wealthy toward the middle class and the poor.

As the deadline for a balanced budget looms, the Jacksonville City Council appears poised to raise the property tax rate, though members are quick to point out that other options — from tapping reserves to slashing even more spending — are still on the table.

The council’s Finance Committee spent several weeks whacking away at Mayor John Peyton’s proposed billion-dollar budget, hoping to cut $53 million and avoid the first property tax rate increase in 17 years. But when the hearings ended Wednesday, the panel found itself far short of the goal.

Official figures haven’t been compiled, but the committee found an estimated $30 million in cuts, the bulk of which would come from slicing all departments’ operating and salary budgets by 3 percent.

With most city officials convinced that finding an additional $20 million to cut is unlikely, the discussion now has shifted to whether to raise taxes. And if so, by how much.

Thirteen of 16 council members polled Thursday by the Times-Union said they’re open to increasing the millage rate, including several who voted in July to keep the maximum millage unchanged, at 8.48.

Even then, many qualified their positions, saying if the hoped-for spending cuts didn’t materialize, they’d be open to raising taxes.

Council President Richard Clark said the top options now include setting the millage as high as 9.27, the maximum allowable this year, or drawing down the city’s rainy-day funds to balance the books.

“I don’t know where it’s going to land,” he said Thursday.

Clark cautioned that until there’s a budget accounting by the council auditor, it’s impossible to say for sure how low the millage rate can be set and still bridge the shortfall.

Council members will work with the mayor’s office to discuss their goals and the cuts that have already been made, Clark said. A balanced budget must be approved before the fiscal year starts Oct. 1.

At a special council meeting Thursday, Clark expects some members will seek to restore some of the money cut from certain departments.

Clark said he is willing to live with all of the cuts recommended by the committee. “I offered up 90 percent of them.”

The full council may reconsider some of the committee’s cost-saving measures, such as scrapping the Inspector General’s Office, eliminating special events serving veterans and seniors, and forcing the sheriff to cut his budget.

Now that the budget panel’s work is done, Councilman Michael Corrigan said he’s ready to vote for a tax increase.

“I don’t have a choice, so yes,” he said.

Council Vice President Jack Webb is looking into ways to increase revenue other than raising taxes, such as increasing the fee private haulers pay to dump trash at the city landfill. That could bring in an additional $4 million this fiscal year, he said.

Webb is still researching the idea and wants to meet with the mayor’s staff, but he said he is leaning toward proposing the fee hike next week.

Councilman Art Shad, a vocal supporter of raising the millage rate and a vocal critic of some of the cuts, said he supports also tapping reserve funds.

“Reserves are there for emergencies,” he said. “This is a once-in-a-generation recession. Certainly you can make the case this would be a valid use of reserves.”

Shad said other Florida cities have raided their rainy day funds during the economic crisis. But he isn’t sure there are 10 council members who would support such a move in Jacksonville.

Setting the property tax rate at 9.27 mills, the “rollback” rate, would ensure that revenue stays consistent with the current fiscal year. Usually, the rollback rate is lower than previous year’s tax rate, but in Jacksonville and around country declining property values have changed that.

Peyton proposed setting the millage at 9.5, a 12 percent increase. The council rejected that idea, keeping the maximum millage at 8.48. That decision was vetoed by Peyton, a move that prohibits the city from setting its tax rate any higher than 9.27 this year.

If Peyton had not exercised his veto power, the council would likely be required to spend about $250,000 of taxpayer money to send amended notices to property owners about the maximum millage rate, Webb said.

Councilman Johnny Gaffney, who voted to set the maximum millage rate at 8.48, said he sees no other choice but to support raising taxes now.

“Unless there’s some other alternative areas we can cut, and I don’t think there are, we have no option but to raise taxes,” he said. “Not at the expense of jeopardizing quality of life and safety of our city.”

Gaffney is also lobbying to restore funding to the library system’s budget so that branches in his district and others won’t have to reduce hours so drastically.

“You take two libraries in the Northeast quadrant, you leave people with no option but to go where? Downtown?” he said. “Most socially disadvantaged people don’t have transportation.”